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The Canada Revenue Agency (CRA) audits people or companies whose tax returns seem suspicious. CRA is more likely to audit self-employed individuals and small businesses than employees with a T4 slip.

CRA has significant industry and demographic data that they utilize to analyze a wide range of tax claims. Any real or perceived differences or outliers to this data could lead to an audit. Often, the first step is not a full audit but a request for further information. However, if full and valid support for the claim is not provided, it could lead to a full audit. You want to avoid an audit if at all possible.